Connecticut sues Kalshi to block sports event prediction markets

Connecticut files lawsuit to stop Kalshi’s sports event contracts

The state of Connecticut has sued Kalshi, a platform where users can bet on the outcomes of future events, to block it from offering sports-related contracts. Connecticut Attorney General William Tong announced the lawsuit on August 26, 2026, calling the contracts unlicensed sports betting.

The state is asking a court to issue an injunction, which is a legal order forcing Kalshi to stop offering these contracts. Connecticut Governor Ned Lamont said the prediction markets put consumers and young people at risk, adding that the state legalized sports betting in 2021 to create a safe, regulated market.

Key details of the lawsuit

• Connecticut claims Kalshi’s sports event contracts are illegal sports betting.
• The state wants a court order to stop Kalshi from offering these contracts.
• Kalshi argues its contracts are regulated by the Commodity Futures Trading Commission (CFTC), a U.S. government agency that oversees financial markets.
• Kalshi says Connecticut is treating it unfairly because other prediction markets continue to operate in the state.
• The CFTC has also sued Connecticut, arguing that states cannot ban CFTC-registered markets.

What Kalshi says about the lawsuit

Kalshi’s head of litigation, Jovy Dedaj, called Connecticut’s move “arbitrary and inconsistent enforcement.” In a post on X (formerly Twitter), Dedaj said the state is allowing other prediction markets to operate while targeting Kalshi. He argued that federal oversight, not state laws, should regulate these markets.

Kalshi has been fighting Connecticut’s actions since December 2025, when the state ordered it and other companies to stop offering sports event contracts. Kalshi sued the state the next day, arguing that its contracts are regulated derivatives, not gambling. A judge recently denied Kalshi’s request for a preliminary injunction, and the company has appealed the decision.

Why Connecticut says this matters

Connecticut officials say Kalshi’s sports event contracts are no different from sports betting and should follow the same rules. Governor Lamont said the state’s goal in legalizing sports betting was to create a safe, regulated market, not to allow unchecked betting on sports outcomes.

The state also claims that prediction markets like Kalshi’s could harm consumers and young people by exposing them to unregulated gambling risks.

What is confirmed

• Connecticut has filed a lawsuit to block Kalshi from offering sports event contracts.
• The state claims these contracts are unlicensed sports betting.
• Kalshi says its contracts are regulated by the CFTC and that Connecticut is treating it unfairly.
• The CFTC has also sued Connecticut, arguing that states cannot ban CFTC-registered markets.
• Kalshi has been fighting Connecticut’s actions since December 2025.

What is still unclear

• Whether the court will grant Connecticut’s request to block Kalshi’s sports event contracts.
• How the legal battle between Kalshi, the CFTC, and multiple states will be resolved.
• If other states will take similar actions against prediction markets.

Why this matters for prediction markets

This lawsuit is part of a larger fight over who should regulate prediction markets—states or the federal government. If Connecticut succeeds, other states may follow its lead, making it harder for platforms like Kalshi to operate. If Kalshi wins, it could strengthen the argument that these markets should be regulated at the federal level, not by individual states.

Prediction markets allow users to bet on the outcomes of events like sports, elections, or even company bankruptcies. Some see them as a way to gather information about future events, while others view them as a form of gambling.

Sources

• The Block
• Connecticut Attorney General’s statement
• Court injunction filing